then you can ask of the professor from carnegie-mellon in reverse the about the federal reserve. he will discuss how and why the fed was created. "washington journal" is next. ♪ host: two democratic senators are opting not to run for 2010. christopher dodd of connecticut, and the senator from north dakota. bill ritter from colorado also will not run. good morning, everyone on this wednesday, january 6. we begin with the healthcare debate and caecilians request to

have access to the negotiations. c-span ceo brian lamb wrote a letter on december 30 to the house leader saying that now it moves to the critical stage we respectfully request that you allow the public full access through television. this has sparked some headlines this morning in newspapers. i want to show you the headlines from roll-call this morning. that is in newspapers this morning as well. we heard a response yesterday from house speaker nancy pelosi's and senate majority leader harry reid also putting out a statement. politico this morning, the live pulse section, has this to say about the request for tv access.

"and c-span standing as a trusted non-partisan player gives republicans more ammo to hit democrats with." we want to know your thoughts this money. you can dial in beginning now.

we want to get your thoughts this morning on tv access to health care negotiants as it moves into conference negotiations. just a reminder to you all about the definition for what a conference committee is, according to a copy of -- the conference committee is an ad hoc joined commemorate of a bicameral legislature appointed by in consisting of members of both chambers to resolve disagreements on a particular bill. while such committees are common in the u.s. and in other u.s. legislations they are no longer in use and the parliament of the u.k. it is usually composed of the senior members of the standing committees of both houses. a conference committee is a temporary panel of negotiators. it is created to resolve differences between similar house and senate bills. manhattan, on the democrats' line.

caller: the key forces been. brian lamb is a national hero. you guys should pick up that footage, the film footage of candidate, who promised to do just what brian is asking for in that letter. i'm sure it is on film that candidate obama said he would have no closed door negotiations. he would allow it to be aired on c-span. finally, i believe the way out of this health-care mess is to open up medicare, certainly to page 55, and allow the medicare to cherry pick help the citizens such as myself. i pay $7,000 out of pocket every year. i've only used $700 in health insurance. there would be left over profit that could go to medicare. the must be millions who would not use their health care if

medicare would open. we don't have to be in the shark tank with private insurers who would deny claims. host: and then they'll, virginia. on the democrats' line. caller: good morning. i think this is pathetic that c- span is sending letters out. i did not ever remember when c- span ever sent a letter during the bush administration. obama said that, yes. he said from the white house. i remember john mccain, both parties, and all -- every other health institution was there to discuss what was going on.

if you see the level of people calling, the intellectualism has drastically dropped. the guests invited over at c- span and his supporters and the people who comment always spew their venomous about partisan shship which is not helping. c-span needs to bring intellectuals, people with better credentials, and better recognized professionals to talk about issues. host: on data viewers point we received e-mail's yesterday from viewers about the request for access to health care.

alex rights, it here, c-span -- there c-span, the letter looks like a cheap political standing of can't imagine what brian lamb was standing. i say this as a republican. be careful, once you lose your credibility you will never get back. on c-span is what page at c- span.org we have the letter to the congressional leaders about the healthcare meetings. there is a link there to pass c- span request. -- on c-span's frontpage at the website we have the letter. there is also c-span's health care have you can go to show in the coverage we have had over the past nine months of this debate. the town hall meetings, the committee's' work on this, and

also press conferences. it is all on our web page, c- span.org. the republican line, you are next. caller: yes, ma'am. thank you for taking my call. i am an elected official in north carolina and week unanimously voted 6-0 to televise our local board meetings on our local television channel. the reason being is the taxpayers of our town -- our budget is over $70 million per year and we felt the public who is paying the bill should have access.

in order to have the trust of our constituents and citizens as to how they're spending the money, transparency and good ethics is imperative. i am very glad to see this is being brought to the forefront by c-span to get more access to the government where our money is being spent. it is our money. i hope both parties allow this to be televised and would encourage you to request more tv access as well. host: let me ask you -- have your meetings started to be televised? caller: we have several different local counties. several of them are being televised. they televise the monthly or bi

monthly meetings. constituents are getting good access on the local channels. we are just now gearing up to start televising the meetings. we have also appropriated funds to have what tests -- webcasts. host: the reason i'm asking is because some opinion pieces of this morning about allowing tv access to these negotiations said it would be worse for these negotiations because it would lead to grandstanding and politicians wanted to say something that would be -- that could be taken out of context in the future. so politics will be injected into the negotiations and when i get a good bill from at. what do you think? caller: we examine those issues

as well. everything from political playing to the camera to individual groups coming to pitch non-profits. sure, in some instances you may have that happen. but on the other hand, the pluses for the confidence of citizens outweigh the negatives. we also agree there certain situations -- personnel, contract negotiations, etc. that deserve some type of closed session which the general statute allows negotiation on to protect citizens. host: will leave it there and go to danny so in north carolina on the independent line. caller: good morning. my stance on the tv coverage as far as all the health care or anything else is we should have

the right as an american citizen to know what our elected officials were doing. what they are doing is putting everything it possibly can end spring on the american public for each other -- democrats/ republicans, at the last minute. host: a republican in indiana, what do you think? caller: should have an open sessions. we have too many people hiding things. all the national offices should have video cameras in the middle times, even the oval office. the president said no transparency.

host: you mean that he calls for transparency? caller: that is right. they should have cameras everywhere. host: here is "the new york times" this morning. this piece says that mr. brian lamb said in an interview that he does not intend to create political controversy. c-span has been able to uncover political controversy on most bills. chicago, randy, on the democrats' line. caller: that article was my very piont. c-span has injected themselves into a contentious process.

you have shown hundreds of hours of the hearings. to all the sudden inject yourself, to push this right wing agenda -- you have opened pandora's box. that is something you should not have done. another is here are "washington journal" but it has a natural proclivity to push a right-wing agenda, especially yourself, steve scully and the woman from "washington journal" as well. you cannot take a backseat. you have to take a stance on these issues from here on out. host: tidewater, va. caller: i agree with the last caller. you guys by opening the situation to have the camera in the negotiation room, i think you have opened a pandora's box. i think you have also waited too

late. he should have done it when the public option was on the table. by doing it now i don't see the purpose. still without a public option is just negotiation for insurance companies. it is only to water the bill down. on the republican side those guys just want to grand stand. do what all the time, not just with the healthcare situation. i agree with the last caller. you have opened pandora's box. host: house speaker nancy pelosi was asked about the request yesterday at a news conference. >> [inaudible] >> i don't know if you're

talking about, but i will say that there has never been a more open process for any legislation and anyone who serves here's experience. tens of thousands participate in the town meetings. over 100 witnesses in the bipartisan hearings were there in the conference. the list goes on. i will not repeat what he has said. we now have another town and then you. that is the internet. our legislation has had visibility for a very long time there. i don't know who you're talking about, but why will say is that i completed disagree. we do not know what route will take. we will take the one that does the job for the american people. host: your thoughts and comments this morning. the republican line, good

morning. caller: before i comment on the tv exposure i want to say that nancy pelosi reminds me of orwellilan speak. the woman is out of her mind. as far as opening a pandora's box, it was barack obama that said on the campaign trail saying that he would have these things. i just had to pay extra to be able to get c-span2. they said for two weeks that it would be moving. to watch it have to pay extra. i am paying for it in the out to be about to see what is going on.

all american citizens have the right and it is what c-span is all about. host: florida, walter, on the democrats' line. caller: it will not make that much difference. what need is people to work together and stop all this grandstanding. we have the best government that the lobbyists can buy. it will make any difference. these republicans are just grants can in. i know that and so do other people. host: so, you agree that of democrats decide not to have a conference committee and do it in private, you agree it is the best strategy to get the bill passed and into law? caller: no, ma'am. the democrats and republicans need to work together.

they world work together by voting out the democrats and putting in republicans. a divided house cannot stand. host: ohio. caller: i have called several times and written a letter to mr. brian lamb. c-span has gone so severely to the right. i'm an independent. it just amazes me that now is the time you are pushing for openness when the republicans had control of the house and senate since 1994. he never once pushed to do that. especially during the pharmaceutical bill. i'm sorry, but you would not have done that then. host: go to our website, c-

span.org. there is a letter to majority leader dole from 1995 and another to speaker newt gingrich from 1994 and 1995. it asked for having public access to all sorts of process upon cattle. commerce, texas, diane, on the republican line. caller: i don't know what the last caller is talking about with republicans having control of the house and senate. host: she was saying that they did have control. caller: but the republicans do not. the democrats and do and have had for the past two years. not only that, the republicans have been blocked from

participating in negotiations since april. they have submitted alternatives to the healthcare bill and nothing has been considered. they have not -- they have only been allowed to submit fewer than 10 amendments to of 2000 page bill. i want to applaud brian lamb. he must be going down the middle. i have heard all these callers say they perceive a twist to the right. i as someone on the right perceive a twist to the left. there must be aligned straight down the middle -- a line street down the middle.

president obama ran on a platform of transparency and conducting negotiations in the open. this is too huge and important. host: here is another opinion. "at first glance mr. brian lamb's request seems reasonable. if one especially considers the tone and tenor of the televised debate of 2009, filling the negotiations seems counterproductive. consider the senate floor debate. rather than filling the 24 days with constructive amendments, both parties recycle charts in the talking points like reusable

shopping? . it goes on to say that it * is on a likable news chador. -- it goes on to say that at times it's like cable news chatter. the two senators did not appear on the floor until the 60- invoked deal was struck. " " georgia, the democrats line. caller: good morning. on the transparency issue, c- span has been there in both the

house and senate debates since they began. now we come to the point where republicans are shut out because they have any ideas and all the want to do is argued. now that they're not have a conference better just getting a few top people together to hack out the bill, either way it will be a bill signed by president obama. this is the main point -- nobody wants this bill signed on the republican side. there will make all these great points about why it should be there on the negotiations. they have no ideas. they say they have amendments. no, no one brought an amendment. all they're talking about is that the bill would not work for

america. host: phillipsburg, new jersey, on the independent line. caller: i believe there should be transparency here. i watched the british parliament on tv quite a bit. they cannot seem to have any problems airing out issues in front of the tv. yes, there will necessarily be grandstanding and backdoor deals. the lobbyists in this country have way too much say. money really runs the thing. host: from "the wall street journal" -- to speed up the process president obama and top democrats agree to a formal conference committee to merge the bills in a series of private meetings between senate and house democrats. the plan to use the more moderate senate version as the vehicle for the final bill and

allow the house to amend it. new iberia, on the democrats' line. caller: i generally agree with as much open government as possible. the grandstanding factor is also problematic. many things that people invited c-span to represent -- there is no fact-checking. you can see that politicfact can check, and i don't see why c-span does not do the same. you allow people to come on and misrepresent the truth. there should be a politifact meter on there to check them.

people on the hard right misrepresent facts to people. there should be some type of check on "washington journal." host: what about the format will allow callers to challenge the guests? caller: we don't really get to challenge them because we get to say" we feel and they come back to have the final word. i think he should have a follow- up because they get away with too much. host: a little more about the healthcare debate. c-span received a response from senate majority leader and harry reid. his spokesman said -- what should truly concern the american people is the republicans' shamelessly transparent strategy to stop performing lacoste's. -- to stop reform at all

costs." caller: i think that brian lamb has an excellent point. it seems like the c-span cameras -- [unintelligible] i agree with callers who have said that we need more exposure and can ability whether republican or democrat. this is our government, we the people. both the congress and senate have forgotten. i want to commend c-span for doing the best job they can. nobody out there does any better. thank you for your service. to the gentleman who just called and said that people need to test and challenge -- you have it exactly right. call in like i have and express your point. host: kansas city.

caller: i like to echo the last caller. i think you guys do a great job. there's no perfect way. as far as the republicans being disruptive and try to block things -- they are throwing bombs just like the democrats did when republicans are in power. neither side wants to work together. there is too much money involved anymore. keep up the good word. in kansas we have an open meetings log. the meetings have to be transparent. it does not matter whether or not the grandstand. host: the editorial echoed that caller's comments. this is a "in the wall street journal." it concerns tom delay. another paper -- dems against

democracy is their title. ready for prime time -- a straight for a promise on the campaign trail. it quotes with the president said about their negotiations on c-span. over to you, president, majority leader, house speaker. open the doors and let the public in to observe and aside. caller: in regards to the transparency pertain to health care, the thing is i'm pretty much sure that president obama does want transparency. but like you said change will not come overnight. we should have transparency not only on the federal level, but on the state and local level of government. at the same time people talk about health care insurance. talking about it not been in the

constitution. what about auto insurance? it was born on american people. at the same time you have to participate. host: moving on to bradford, pa. frank, on the republican line. caller: my point of view, the problem we have is healthcare is killing the industry. i am surprised at the republicans. why don't they do something to alleviate the cost on industry? they are leaving the country because they will not pay the insurance. the unions and insurance companies are not helping healthcare. healthcare is something the government will have to take over. i believe in capitalism, but we are killing companies. the rand corporation did a study.

we don't need that type of business. the republicans are not thinking for one minute about saving jobs. we have international companies here who do trillions of dollars worth of business. we get 10% of the labor, nothing to medicare from the profits and nothing to social security. host: a headline this morning, crux of health care deal -- premiums. it would cover an additional 36 million people. the senate bill would start one year later.

jacksonville, fla., on the independent line. caller: i appreciate you, sis. i want this to be wide open. i have tried to contact my senator ben nelson and he never gives me an answer. he says what i want to hear. let's open it up. host: wichita, kan. on the democratic line. caller: i am very angry at this bill that harry reid and answer

policy have pushed on us. it is the wrong thing to do. i have already seen evidence of what it has done to mind. i think we should be able to vote on this thing affecting the people. i don't think we should have to take something that these people are not revealing the real thing to us. they don't tell us anything. host: yesterday at the white house press secretary robert gibbs was asked about c-span's requests . >> i can't you answer the c-span question? >> i did. >> why do need to see the letter? >> dan asked me about the letter. i have not read the letter. i answered a dance question and i answered this before we left for the break, keith.

the number one priority for the president is getting differences worked out. getting a bill through the house and senate. with the back and forth and details of what is in the bill -- i don't want to keep that from continuing to happen. i don't think anyone would say we have not had a thorough, robust, outstanding two calendar years' debate on health care. host: we're talking about tv access to health-care negotiations. michigan, on the republican line. caller: i think we need and on the congress. the american people need to get out and vote this election year and in 2012. votes are bought. they're doing behind the closed

door deals. it is not what the american government should be all about. the american people really need someone in there to stand up and say we to amend it -- what is going on here? we need to help the people. it should be for the people. they are working against us. host: we have a message by twitter. there is no other reason not to broadcast as promised, but the people will not like what they see. dallas, james, on the independent line. caller: yes, i watch you guys all the time. sometimes even more than i want. but what it comes down to with the healthcare debate, i think

you guys really cover both sides very well. you do a very good job. i want to commend you because i can see both sides. sometimes i'm very one-sided. i like to lean one way, but sometimes c-span always brings me back the other way to keep its. i would to say hi to karin. thank you. host: the story about christopher dodd of not running for another term. this is the front page of the hartford newspaper. inside "the washington post" this morning. without him on the ballot, the republican chances of taking over the seat are considered. considered richard who has served as state

attorney general since 1990 is widely expected to declare his candidacy for the seat. by iran, north dakota -- he will not run again. this paper this morning again about that senator dorgan. caller: good morning i think things should be transparent. my question is to all the republicans -- when george bush and republicans made the so- called medicare bill, and they

had requested that c-span be a part of it? but you were not a part of it. today everyone makes a big. i am saying to the democrats, when you go back behind closed doors and you put a public option. you need to make this for 2011. people are hurting and need. medical need for the man who called the in to say that the cameras should be all in the white house -- now how would he like to have cameras in the bedroom when he and his wife want to have sex? that is none of his concern. caller: for all of those who listen to c-span, brian lamb is a jewel.

we get to express our thoughts. freedom of press is at stake. if you put the meetings behind closed doors, you give it lobbyist like planned parenthood you want to have our tax dollars used under the guise of reproductive rights to kill unborn babies. and to shut down anyone who would disagree. rush limbaugh is right. they are almost in a mafia style to shut down the press. i applaud brian lamb. i applaud any media person who will say everything needs to be out in the open where ordinary citizens can view and say yes, i agree. or no, i do not. host: this from the front page ritter to quit 2010 race. he sets up the toll on his family. arcadia, fla. for the

independent line. caller: good morning, greta. thank you, "washington journal." if i remember correctly, years ago when the c-span wanted to televise it was resisted tremendously. thank god for the persistence. this particular bill about to take over one sixth of our economy is really not a healthcare bill. it is a congressional bailout. there are two big, red flags. the healthcare program does not come into effect for four years. they are going to bailout of failed programs. the second will add any legislator -- republican or democrat.

house or senate -- if there will put themselves in the family on this bill -- and they will start doing the belt way dance faster then you can say one, two, three. host: "the washington times" saying that this feisty pombo will run again. george announced recently that he would retire from that seat. the former republican richard pombo plans to run. also in the news this morning the front page of "the u.s.a. today" -- pepper rodgers drop by about one-third. it is down from last year's number of your marks. this headline in the money section.

automobile sales in 2009 with an uptick. the last call about tv access to health-care negotiations. james on the democrats won. caller: it looks like they're trying to limit the amount of money the gift on disability. what happens is they say there will not limit anybody unless they make to another $50,000 as a couple or have that as a single person. they seem to be ticking out an extra $100 there from people disabled from the check. they say it is because of the irs. even if they're making $90,000 on disability. i don't think it is fair. it is not obama doing it. it is the congress and senate. host: this conversation began

this debate on c-span's facebook page. you can continue the conversation there. also, a new facebook page was created called "let the cameras in." things for your calls. we will now turn our attention to national security and talk with eric lipton of "the new york times." >> admiral mike mullen talks this morning about the role of the u.s. military. his audience is high school students. we will have live coverage at 10:00 a.m. eastern. then at noon in discussion on access to and availability of water in the developing world, hosted by the wilson center in catholic services.

the picture on your screen of elvis presley and richard nixon is the most requested but note in the national archives. two people who were there will talk about that photo session. the discussion will be tonight live from the national archives at 7:00 p.m. >> in fed we trust -- this author on ben bernanke in the role that he played after the economic collapse of 2008. he will discuss the book with the former federal vice chair and first director of the cbo. >> the new c-span video library is a digital archive of programming from barack obama to run margaret regan. over 157,000 hours.

-- from barack obama to ronald reagan. "washington journal" continues. host: the homeland security director contributed to this piece. obama says that u.s. fail to understand intelligence on terror plot. what did he say about going forward when it comes to combating terrorism? guest: yesterday he did not offer any specifics on what would change, but mainly that they continue to investigate in two primary areas. the second is once a person does to a checkpoint at the airport improving those security systems.

investigations continue in those two areas. he said we're still waiting for final recommendations and cannot yet say exactly what we will do to change the system. host: explain what the watch list is? guest: the u.s. has at least four different lists it is checking with concerns about possible ties to terrorism. one of the questions before the administration is where people should be in the quarter different lists. should you only do additional screening if they're on the worst of the list, or on any of the lists? in the case of the nigerian young man he was on the list of 500,000, but not 14,000. should they be disproved.

-- should they redistribute who is where on which list? people felt as if there were too many on the list and the last several years and that too many were getting harassed at checkpoints. you heard about senator kennedy and others getting stopped. there was pressure to reduce the number. the pendulum is not swinging the other way. there will be a shift towards more getting extra scrutiny. will be some new equipment installed at airports. there are only 40 machines in the entire u.s. that do the full body scan. it is at 19 airports. there are 150 additional machines on order. there will be an order for an additional 300. they will take a full scan of

your body to look for weapons or explosives. this man had it in his underwear. host: let's return to the list. why are their quarterbackshow did that come about? you said more people will be put on more exclusive list. what about the idea of consolidating these lists? do they talk to each other? guest: guess, the largest is really more of a place to put a name as soon as they hear it and before they have determined conclusively that the person is tied to a group. it is not easily accessible to t.s.a. and a person enters the airport. but as you get onto the next list of 400,000, then you are

considered a likely threat. the reason for four -- they don't exist in entirely different universes, but the most categorize. they did different reports. they have to put people in different places based on the seriousness of the information. it is essentially ranking by severity. the standard by which will move from one to another will change. host: president obama said yesterday that his team missed connecting the dots. you heard that after 9/11. it continued for years after that. why is it? what does it connecting the dots mean? guest: getting back to the lists. the guy was on the least serious list. he clearly should have been on the most serious list. if they had put together all the information and had about him he would have been. as soon as he got to the airport

in amsterdam there would have been inodorous to the board the plane. the problem that exists and which the president has a knowledge it now twice is the system is still not able to collect information from a variety of sources quickly, and to connect them. it seems so simple to an outsider. you think that google can do that. for the billions the government spends it does not have the capacity to connect information. it is still a bit of a mystery. something that arrived in august last year that there was a nigerian man in yemen who was participating in a plot, some of the plot. they have that one piece of information from intercepting communications in yemen. and the second piece came in november when the father of

vision and went to the u.s. embassy and said i think my son is in yemen and is radicalized and a half some bad ideas pointed towards the u.s. the cia was at that meeting. they have a young man in yemen. you have his name. you have the second piece of information about a nigerian. i'm sorry. the first was the nigerian son going to yemen. but they did not connect them. . how is that possible? host: president obama has rejected and held a meeting yesterday. what will happen on capitol hill? guest: the republicans immediately got on to his case and sought a separate surveys suggest -- and saw it as an opportunity to suggest that he has not been focused on terrorism. that has died down a bit. there were thought to be too aggressive and thought to be making it a political issue.

hearings have been announced. it will be investigated. the subject will not go away. politics have declined a bit. republicans don't want to be seen as exploiting this. host: in the "the new york times" there's a piece here by two reporters who served on the 9/11 commissioner. they write that it does not fix the systematic flaws. they write that turf battles exist between intelligence agencies. and that is responsibility is deflected and the drift toward inertia continues. guest: the joke is an acronym of "soup." so many agencies are involved in collecting and analyzing tapes. an open question is that so the

nsa, the agency that intercepts telephone calls presumably heard there's a nua young nigerian man participating in a plot. but that had to go to the national counter-terrorism center run by the director of national intelligence and the cia -- the go from one to the other? did the cia share the information from the father at the embassy with the national counter-terrorism agency also? there are too many acronyms and participants. it is not clear that they are processing fluidly. the old saying is that the terrorists only have to be successful ones. the u.s. government and other governments have to be successful every time. there is no room for error. while the system is much improved it is still not working

well enough to prevent such incidents. host: you touched on the politics. let's go through some headlines of the papers. baltimore -- irate obama dallas security changes. here is philadelphia -- a failure of intelligence says u.s. agencies failed to connect those stocks. the financial times -- obama rebukes security agencies. some say he's called the national security team. others have said that someone needs to get fired over this. it appears from the headlines and from what the president said yesterday that he does not plan to fire anyone? guest: it is unclear at the moment. it has not yet become public. exactly where did the breakdown occurred? which agency, which person, which system? we note the different chips, but who failed to connect them

successfully? once you find out where the fault was and who was the person in charge -- does the need to be a change? we don't yet. know the yet -- we don't yet know the answer. host: let's go to phone calls here. we're speaking with eric liptionon, a common security reporter for "the new york times." caller: gambingood morning. this idiot we have in the white house cannot keep the white house secure. i don't know why we think he can keep the u.s. secure. it is nothing but a gang of thugs up there.

maybe you can tell me, how come in eight years of republican president in office -- i cannot count the number of times people try to kill innocent people here, which was supported. this it it gets into office and we have two -- 1 ride on an army base. and this guy from human where his own father called and tried to give us a fair warning. what has changed? guest: first of all, the system in place today was set up by the last administration. you have some new political appointees at the top, but basically the security system is the bush won with a modest changes. to place blame -- the current or last president -- the system has improved, but it's still not as strong as it needs to be. the fact that there have been two incidents recently as not

entirely coincidental, but they could just as well have happened -- actually, increasingly in the u.s. there is the radicalization that has occurred. previously most clocks were aspirational. while the justice department tried to argue there were serious threats -- it turns out there were mostly guys talking big. in recent months some plots discovered in the u.s. -- and the shooting at the military base are real. i don't know that you combine the president. there's something happening in the u.s. that has taken a more serious turn. also with him in. you could argue the bush administration did not focused enough on human. continuing to gain with the obama administration not focusing enough.

there is no reaction. host: when you said that the national security system in place is the same as under president bush, your colleague rights that inside obama's war on terrorism much of the personnel are also from president bush's administration. guest: yes, when you have a turnover the top appointees change, but there are hundreds of thousands of employees who work there. they are civilians to go from one administration to the next. they are the ones engaged every day in running the show. there is a lot of continuity there. there some changes in policies and those at the top. but essentially the system was built by the bush administration and obama is in the process of modifying it in

various ways. caller: the fort hood incident -- was the person also a tourist? number two, there are a lot of sleepers probably in texas and new jersey. will they become active? is there anything done to check on them? there must be something going on. for these things to be happening. guest: some have been reluctant to call the fort hood incident a terrorist incident. the suspect in that case was in communications via e-mail with the radical cleric who inspired others to pursue violent solutions. was he a terrorist or just inquisitive and became -- lost control? it is almost moot.

he used the weapon to kill other people. . . guest: the problem is that there does appear to be an increasing seriousness to some of these radical people in the u.s.

the justice department, the fbi, and the authorities are concerned about that. why is that happening? . it has been happening in europe over the last eight or nine years. to some extent, we have been lucky to not have the presence of active cells. it is an open question and something of concern. host: new jersey, go ahead, on the independent line. caller: thank you. the president said there was a systemic failure in our security. that is a basic problem. i believe that mr. lipton said -- at any rate, i cannot remember. in a systemic failure like that, where ever it leads, people should be accountable.

if it is more than one director, more than one department head -- the whole system needs to be revamped. the president admitted it was a basic failure. guest: i think it is true there needs to be accountability in government. the public has an expectation that if there's a failure that can be clearly identified, the person in charge of that area should be responsible. i'm not suggesting that someone should not be fired, if that is appropriate. at the moment, we do not yet know. did the nsa failed to pass on the information? or was it at the counter- terrorism center that they failed to connect the dots? i do not know is, president has figured this out yet. at the moment, we do not know

where to point their finger. that is why we're in this pause period. either through the presidential investigation, or in congress, i am sure the public will know. reporters are asking the same questions. we hope to answer them as soon as we find out the answer. there will be hearings this month. i do not yet know the dates. anytime you have something like this -- it is almost like a competition among the committees in congress to call witnesses. various committees will have hearings in the house and senate. host: what is the national counter-terrorism center? guest: is a facility in northern virginia. it is a huge room filled with computers. it is basically the brain of the united states intelligence system. any tip -- it was created after

september 11. this was the place that was supposed to answer the 9/11 commission report on the failure to connect the dots. this is the place. this is one of its first big tests. this is a place in northern virginia were all the data comes in. there's not a single agency that is supposed to run the show entirely. it's under the office of the director of national intelligence. it is under the director. it is not any single persons jurisdiction. all the different agencies are supposed to be participating. they are all supposed to share the data and make sure they do not miss things. in design, it is supposed to do exactly what it should have done here. it did not. why? i do not know the answer. caller: good morning.

in the regulatory world, there's a thing called root cause analysis when a problem occurs. you look to find out what the true systemic cause of the problem was. when i look at what i know, this was not a system failure. this was a system failure because humans, who follow the system, did not carry through on their responsibilities. one thing that i think that we have all known and learned over the years is that the intensity of your boss for a certain task sets your priority. when i learned that eric holder, his law firm did pro bono work for the terrorists get them tried in american courts, and when i see our president called these overseas contingency operations man-made whatever --

it clearly filters down to the population of the intelligence agencies. these people are not really that interested in it. guest: i do not see evidence of that so far. i think the root cause analysis is exactly right. that is what nasa does after the shuttle explosion. i think that is under way. you have to understand exactly why the error occurred. the president said last week -- he called it both a human error and a systemic error. for example, the cia was there in nigeria in the meeting in the state department with the father. when he was warning the state department and the diplomats about his concern about his son.

the cia -- you would have thought that the cia would have also heard about the intercept about a young nigerian man in yemen. the state department issues visas. the state department was obviously there at the meeting when the father was there. they had an active visa for this young man to still come to the united states. you would think, why not pull that visa? that would have stopped him from getting on the plane. there are potentially some human errors. i suspect there will be accountability here. host: gail is joining us from maryland on the democratic line. good morning. caller: good morning.

i have a question about dick cheney. i feel that our former vice president has made statements that have been an absolute invitation for more vigorous attempts to attack our country. after the bush administration made a huge bureaucracy out of our counter-terrorism efforts, i think it will take some time for president obama to streamline them. i'm wondering why more of our national security people are not speaking out against the un american dangerous rhetoric of our former vice president after he and george bush decided to completely ignore unprecedented warnings of the coming attack on 9/11. guest: this is a topic that people get emotional about. i am not suggesting you are

excessively emotional. it is interesting how politics and domestic security get mixed up. her point is, to the comments by the former vice president invite more acts of terrorism? john brennan, who is now the homeland security adviser has essentially said i'm not a democrat or republican, but those remarks are unfair. he has gone out to defend president. of course, he is part of his administration. it is not surprising. it is unfortunate when these issues relative to national security and homeland security get mixed up in politics. it does not matter what party you're in. you do not want the united

states to get a tax. the politics are irrelevant here. after september 11, i was a reporter in new york city covering the rudy giuliani administration. there was this weird time of covering what had happened. i was just sharing information about what had happened. i think it is unfortunate when politics interfere with what is important, which is making sure the systems are solid and that we prevent the next attempt. host: jodi in michigan on the independent line. good morning. caller: good morning. thank you for c-span. i wanted to ask a few questions. we have all these things in place that eric talked about

this morning. how come nobody has called bill gates and asked him to provide us with software to tie all this together? and to let the computer do what it needs to do and make two lists -- a high profile list and a low profile risk. the other question that i wanted to ask was -- if overseas countries do not allow them on planes, why don't we cut off all flights from those countries? i have one word for my countrymen, it's not up to our government to protect us. it is apparent they cannot. as citizens of the united states, united states of america, we need to be vigilant. we need to pay attention to what

is going on around us. we need to watch and listen. host: let's begin with air marshals not allowed on airplanes overseas. guest: air marshals are allowed, and they routinely do fly. if i'm correct, they generally fly on american carriers. that may be the only limitation. it is up to foreign governments to provide security on foreign carriers. they do not speak publicly very much about their operations. air marshals are very much on flights coming from overseas. they recognize that is perhaps the more severe threat, incoming flights. they're not on every flight, but they are on a lot more than they were right before christmas. in situations where foreign governorgovernments have said t- and the u.s. does have the authority to say to a carrier that you cannot fly to the u.s.

because of concerns about security. for example, if it is not sufficient at an airport, they can block flights for that city. that does not often occur, but they do have that power. the other question about why doesn't the intelligent system useuse software to connect the dots, i'm sure that they do. obviously, it's not working well enough. they obviously have incredibly sophisticated software. they must constantly do that. there's all kinds of databases that pulls a huge pieces of information together. why it did not do it in this case is a good question. they spent an enormous amount of money. host: what about u.s. security officials checking passengers and cargo in foreign countries

before they come into the united states? what sort of personnel resources do we have at foreign airports as far as security people checking passengers and cargo? guest: foreign governments would not allow u.s. officials to do the checking. they would say it is our sovereign right to provide security. there's an international agreement. there is an association of countries that set international standards for airport security. the united states said on sunday night that we are not satisfied with that and we will unilaterally impose a new requirement for anyone getting on a plan to the united states that happens to be from 14 countries, and we will require that those people from those countries, or anyone else who happens to of taking a flight from those countries, that they be subject to another round of checks.

they impose the burden on the airlines. not on the countries. they do not have the authority to impose that on the country's pre the airlines need permission to fly to the u.s.. although it did not use its own people, the u.s. said to the airlines, you must now meet a new standard if you want to fly here. that went into effect sunday night. americans might be subject to these additional measures. the rule is for people from these 14 countries. the u.s. is reaching out, but it is not doing it through its own people. it has imposed a that on the airlines, who now presumably will hire contractors to do that. host: on the republican line in san diego, you are on the air with eric lipton. caller: from 1980 to to

2001, i worked with the government. i noticed a lot of things going on in terms of human intelligence and how we got those things. that is a separate issue. do you feel that the department of homeland security is meeting this missions statement? you are talking about inspection of cargo and everything else. and as far as the director for national security, i think it was talked about a long time ago. information coming from the cia and the army intelligence and everything else. do you feel that director is left in the wind flapping because those agencies are so big? machine concern is a homeland security. -- my main concern is the

homeland security. is it meeting its mission statement? have you seen some of the problems it is having? guest: the mission of the department of homeland security is almost ridiculous. it is charged with doing so many things. the expectations are so high. i covered homeland security since its birth. as it was first set up, it was dysfunctional. it was wasting money left and right. with katrina, it could not give et up off its feet. i think that -- i know the former homeland security secretary used to talk about the expectations the american public has.

them the threshold that the united states has. in fact, the united states cannot stop every thread. is homeland security set up to block all the various types of threats? the thousands of ships that, and, the cargo that comes in on airplanes, people crossing the borders, and the various chemical plants. there are so many different ways. the answer is no, it cannot. it is sort of an impossible mission. is it getting better? probably. as the obama administration got started, there has not been as much focus on domestic homeland security.

the homeland security secretary is someone who had more background and immigration issues coming from arizona. she is realizing the need to focus more on the counter- terrorism part of homeland security. i think that's a message that has been heard of the department. host: when the department of homeland security was created in 2002, how many different agencies were folded into its? guest: i forget the number. it is something like seven. everything from immigration to the coast guard to the secret service to the air marshals. it is an incredible mission. as a reporter, i was amazed by how frequently i encountered the agency. everywhere you looked. you did not realize that homeland security was such an enormous task that can never

truly be finished. host: from georgia on the democratic line, good morning. guest: basically this is the best thing that could have happened for dick cheney. the people who were at the top when george bush and detainees were in office -- george bush and dick cheney were in office. this is what the republicans have been talking about. no one has been killed by an outside a tttack from someone outside the united states since obama was in office. who will benefit from this attack? thank you. guest: the political point on

this is something i tried to stay away from. it is not really what the central question is for me. the political implications of a terrorist attack is sort of irrelevant. host: let's talk about the difference in tone between president obama and president bush. it is something that your colleague, peter baker, writes about. president obama intentionally takes a different tone and reacts differently, even to the christmas day bomber. guest: that was a shift that was occurring in the bush administration, as well. if you look at the first homeland security security, tom ridge, and to look at michael chertoff, chertoff really

shifted with the color alert system. basically, it did not happen under chertoff, except when there was the liquid bomber's threat from london. michael chertoff was already intent upon bringing down the kind of hyperventilations that occurred. i think that obama has continued to that. to some extent, terrorists succeed if they get the united states into a frenzy, even if they are not successful. terrorism is as much about the killing of people as it is about the terror and the destruction that it causes. the administration has to be careful to not overdo its response. if the president would have gotten on a plane and come back to washington from his vacation -- to some extent, that would

have suggested that even though the attack in detroit was not successful, it would have been successful. i'm sure that they weighed what is the appropriate reaction? i think there definitely gauging what is the appropriate response. i think the public is well served by that. host: daniel on the independent line. caller: good morning. i understand that the journalist you have would prefer to avoid the political implications, but unfortunately it is impossible because it ends up shaping the policy. the reason that dick cheney, karl rove, and all the bush people, the reason they say all these outrageous things is because they know that today modern-day journalism will not call them out to avoid the conflict. our society, are functioning

government, requires journalistic integrity and the ability to call things out there are ridiculous so we can improve an. guest: it is not something that i want to get engaged with. that is not my job. at the washington bureau of "the new york times" there are a lot of reporters. there's the political shop and the homeland security shop. and not a political reporter. -- i am not a political reporter. we are writing about the political aspects. it is not what my job is. host: how politics impact the policy of homeland security. guest: there's a question -- the

first response from the administration was this half- hearted thing. they suggested they meant the system worked after the attack. and then the president's remarks were pretty subdued. when he was still on vacation, he said there was a systemic failure and the man should not have been allowed on the plane. there was a huge shift on what the president and the administration had said from one day to the next. how much of that was political? i think it's a valid question. how much was it that the president's people were sensing that he was appearing to be too subdued, and that they weren't being aggressive and critical and of? and how much was that they learned more and concluded it had been a huge failure? there's a good chance that

politics played a part in the change of the tone of the president. it was at least a factor. yes, politics plays a part of everything in washington. it does not need to dominate discussions about protecting the united states against an attack. host: north carolina on the republican line. caller: what was said before that, the same policies are in effect between the bush administration and the current administration -- that is not true. they have changed the chain of command drastically when they took the cia and made it a secondary role rather than the primary role. and the fbi has moved up to the primary role. do you have anything to say about that? guest: there was a lot of changing of rules that occurred after september 11. now there is the director of national intelligence that the cia reports to.

the fbi plays a much greater role in investigating domestic terrorists plots. there have been significant policy changes regarding the treatment of suspects by the obama administration. i do not know that there has been a change in exactly who is in charge of investigating and trying to prevent terror in the united states. as far as i'm aware, there have not been changes in the distribution of responsibilities so far. host: last phone call for eric lipton. oakland, calif. on the democratic line. good morning. caller: good morning. i have listened, and i really believe that what he is trying to say is good in terms of the fact people need to understand

the same individuals, whether their roles have changed or not are the same individuals who worked under dick cheney. president obama, for a year now, we have watched. he is not quick to jump to conclusions. he processes things. he looks for answers before he gives. he looks for what is going on before he comes out and gives an answer. it is a total change from what we had for the last eight years. when 9/11 happens, we were already in an uproar about bush winning the presidency. when that happened, republicans, democrats, or independents, we

all came together as one nation. for the republicans to pounce on this when this is their dysfunctional system of government -- obama has not even had a chance to see if the system works. we now see that the system that dick cheney put into place does not work. host: i want to point out the "usa today" editorial is about the issue that you have b brought up. their view is that in today's partisan world, no opportunity is wasted. writing in opposition is former house speaker newt gingrich, who says it is profoundly wrong policy and that criticizing president obama's terror policies is not partisanship, it is citizenship. eric lipton, homeland security reporter for "the new york times", thank you for your time. guest: thank you.

host: when we come back, we'll turn to iran and what is happening in that country. we will talk to executive director kenneth timmerman, foundation for democracy in iran. >> president obama welcomes award winning teachers to the white house today as part of his educate to innovate campaign for excellence in the so-called stem fields, science, technology, engineering, and mass. it follows its usual daily economic meetings. this is after a two hour meeting yesterday with his national security team on the christmas day bombing attempt. more on that issue from the chief of staff for the national security council, speaking earlier on cbs "the early show." he says president obama will follow through on all intelligence leads. peter king of new york, the leading republican on the homeland security committee,

spoke earlier on abc and cbs. he says there's a disconnect between the intensity of the president's rhetoric and what he proposes to do. he said that if the situation is as bad as the president said it was, someone will have to go. the interior ministry of the yemen it says that officials have arrested three suspected al-qaeda of militants. it is the latest move in yemen's efforts to crack down on al-qaeda. those are some of the latest headlines on c-span radio. >> i'm always concerned about the potential unforeseen consequences of new regulations. regulations of any kind act as a tax. when you tax or regulate something, you tend to get less of it. >> this weekend, republican fcc

commissioner robert mcdowell. saturday at 6:30 p.m. eastern on c-span. >> "washington journal" continues. host: kenneth timmerman is here to discuss what is happening in iran. secretary of state hillary clinton addressed the issue yesterday. here's what she said >>. >> we have avoided using the term deadline. we want to keep the door to dialogue open. we have also made it clear we cannot continue to wait. we cannot continue to stand by when the iranians talk about increasing their production of highly enriched uranium and additional facilities for nuclear power that very likely could be put to dual use.

host: here is the headline in "the washington times." what is your reaction? guest: the iranians have been trying to play out the clock on this for many years. every opportunity that they did, they will continue to do that. their goal remains constant, and that is to develop nuclear weapons capability. whether or not they build nuclear weapons is another story. we know they want the capability. we know they have enough nuclear weapons material to construct approximately two bombs, if they choose to do so. we are just talking about whether or not, united states is prepared to live with a nuclear iran. every signal sent by washington is that we are prepared to deal with a nuclear iran. host: what about china saying yesterday that they will not consider sanctions on iran? guest: it is no surprise.

the chinese have never indicated they would be favorable to sanctions. those who believe they would be are deluding themselves. the russians have been slightly more amenable. the only reason they have been amenable, according to my information, is because they got a wake up call this summer when the iranian regime apparently pulled a fast one on them in an attempt to smuggle missiles on the arctic sea to iran without the explicit approval of the russian government. this is why netanyahu went to moscow secretly in september. it was quite a controversial story. that appears to have changed mr. putin's thinking somewhat. he will go along with sanctions to a certain degree. he will not go along with helping any outside effort to topple the regime. host: secretary of state hillary

clinton said they will move forward on sanctions if iran does not respond. ahmadinejad has said you can give us all the deadlines you want, but we do not care about deadlines. what is this administration talking about when it comes to tougher sanctions? guest: that is a good question peter yet i can tell you what the congress is doing. the administration does not like that. i can tell you what other outside groups are doing. this administration does not seem to like that either. host: what are congress and outside groups doing? guest: congress has passed two bills over the past six months, which i think are very positive. you have one that was championed by senator mccain and senator lieberman. it was signed into law by the president. it includes money to help victims of iranian censorship.

in other words, to provide technology so protesters can get around censorship of the regime. this will enable the pro- democracy movement to be able to organize. that's a very positive thing. the administration does not like it, but the president signed into law. the proof is how the money is spent. my foundation applied in the bush administration to help the pro-democracy movement in iran. we were told exclusively that they did not want to do think tanks and studies. they wanted this money to go right into iran. we said we can help you do that. so we put in a proposal to do essentially was going on right now, which is internet human rights monitoring, to flood the country with tiny little video cameras and have secure internet

portals where they can get the information out. the state department professionals got ahold of that and said it was way too provocative. so let's do think tanks and studies. the proof is in the pudding. host: about the unrest in iran, how does that tie into the negotiations over its nuclear ambitions and what moves the u.s. makes and other countries make? guest: it is interesting. i think ahmadinejad is playing a very canny game. this is somebody who thrills in his defiance of the outside world. there were probably 30 people killed in the latest demonstrations on december 26 and december 27. he does not care about that. the regime does not care about

that. they used the demonstrations in a way to play out the clock. president obama came into office saying he would immediately open negotiations without preconditions. immediate from january 20 until october 21. that's a pretty stretched definition of the media in anybody's book. ahmadinejad benefited from that. widely administration did not move faster is a story i cannot tell you. host: about the student protesters that we were just showing the video of, does this weekend the president and the supreme leader? what is the status of both of them? guest: in tehran without any doubt whatsoever, we are seeing the most massive, organized, intense protest movements since the iranian resolutiorevolution.

this is not localized in tehran. it is not one segment of the population. it is not just students for young people. it is all across the country. it is in key cities. the leadership of the islamic republic feels the pressure. they're trying to put on a tough face. what you have, which is an interesting development, a former intelligence officers who now live in germany and other places to identify some of these people guilty of shooting into the crowds, or they have been photographed knifing people. they have identified these people and put their home phone numbers on the internet. this has had a really powerful impact inside iran. there are witches inside the revolutionary guard -- there are

wedges opening up inside the revolutionary guard. even inside the supporters of ahmadinejad, the so-called hardliners. there are wedges and things that could be exploited if the united states had an intelligent policy to get rid of this regime. host: what should that be? guest: there are several things. i just got back from a trip in israel. and when there for the first time in april. i went back eight months later. there was a pretty backedramatic development. the israelis were no longer talking about military action. they were no longer putting the emphasis on the next essential threat to israel of iran's nuclear weapons. they now say, things have

changed since june. since the demonstrations, the failed election, the stolen election, things have changed. there's a real serious challenge to the regime from inside. in my book and elsewhere, i used the idea of the two clocks, the nuclear clock and the pro- democracy clock. for the first time, the pro- democracy clock is speeding up. they told me they believe there's a serious chance this regime could go down the three things were done. one, there are serious, international economic sanctions. they have to be serious. they have to hit the regime hard. host: how do you do that? guest: you could do it through iran. you could also doing it through a cooperation of willie nations. germany continues to sell $5 billion of high-tech of the

goods to iran. that is a lifeline to go iranian regime. that's the thing that needs to be reduced. in the other bill that congress has passed, that the president does not want to sign, would impose sanctions on companies that sell refined petroleum products. iran, which is one of the world's biggest oil exporting countries, does not make all its gas products. the import about 40% of its refined petroleum products. this is a choke point for the iranian regime. , said let's impose sanctions on companies that are selling refined sellingto iran. that would have a serious impact on the regime. the first thing is economic sanctions. the second is some hope for the pro-democracy movement. that does not mean military action.

start with moral support. the president of the united states using his bully pulpit, as george bush did, to say we support the rights of the iranian people to freely elected government of their choosing. president obama has never said this. president obama waited so long after the protests in june to say anything about the harsh crackdown and murder of demonstrators in the streets that some of the subsequent demonstrations began to challenge him by name. you could hear the chants in the streets. obama, obama are you with us or against us? some support from the united states. delegitimizing their regime. the third things the thi is to s keep a military threat on the table.

not a threat, but you have the demonstrating capability. they have conducted two long- range aggressive operations to demonstrate a capability they have never demonstrated before. that is, there airforce is capable of carrying out a strike that would hit land targets. host: ken timmerman is our guest with us this morning. theresa on the democratic line, go ahead. caller: i am basing my question on time i have spent with iranians in the united states. studying nuclear technology in the 1970's -- bay our students here. the united stateselcome them here. in the 1980's in iran, the

sanctions that i experienced there in the home of an iranian who welcome to me in, he sat a pint of milk on the table. when i finished drinking it, he says, yes, you have a big american appetite. you just drink my baby's milk for the week. i think he did it for stock fell you -- shock value. of course, he tried to cram democracy down their throats and asked them to stop growing their own food. that is mainly what the students revolt. we have had two warships off the coast of iran while i was there in defense of the rough. -- in defense of iraq.

i'm really afraid that when the iranians get here because they're looking for the freedom and democracy that we will not even have here anymore because of people like you. i do not think freedom is what you want for them. i think you do want democracy. i'm still looking for a book. when i was a student at the university of davis in california, the book "democracy must periodically be eighthbathebathed in blood." host: an opinion piece in "the new york times" today. it says protests shows a desire for change, but not received change.

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] -- guest: she raises a couple of interesting points. let me first say that the u.s. sanctions, the international sanctions, never impacted iranian food products, medical products, a humanitarian goods, and they still do not to this day. there's no shortage of milk in iran. that is just not true. if it is a shortage, it is a shortage created by the regime and their own inefficiencies. neither the united states, france, or germany can cram the mackdemocracy down somebody's

throat this is ridiculous. most people that i have met over the past 30 years -- i have spent a lot of time there. most people aspire to be freed. i do not know why anybody would aspire to be anything but free. they are faced with these regimes that enslave their women, given no future to their children come and steal the fortunes of their countries. no wonder the middle east is so underdeveloped. as for the writer, his a former cia analyst who was then the tell the to the national security council. he worked during the first two years thain the bush 43

administration. and then he invented the story, which was truly astonishing, that there had been an effort, and offered by the iranian regime to negotiate some kind of global settlement with the united states. it turns down that the so-called offer was the pure invention of the swiss ambassador in tehran, and was delivered by april regime activist in the united states, and was never taken seriously by anybody of the state department. he continues to insist that we missed a great opportunity to negotiate a great deal with iran. he has also spread the these lies that the iranian regime was cooperating with us after 9/11, and we just never seized that opportunity to work together.

the facts on the ground were much different. it's really a matter of public record. after the september 11 attacks, the u.s. military, our satellite intelligence and the rest pick up convoys to evacuate al-qaeda members out of afghanistan into iran. they were evacuating hundreds and thousands of al-qaeda and family members by aircraft and by land into iran. i do not see that as cooperating with the united states. host: he was on the host "washington journal" recently.

you can go to c-span.org to hear him in his own words. caller: i am a veteran. when i was there, we had allowed the mek case. i recently read that we close to that base. they were on our terrorists list. we were working with them. i was wondering if closing that based increased reaction in iran. not just want a monopoly for killing people in the middle east? we do not let anybody. . thank you. guest: the interesting thing about the base -- it was set up

by saddam hussein. the reason -- you can be pro regime or anti resume today in iran. everybody hated saddam hussein. everybody has bad memories of the iran-iraq war. they took their operation to saddam. i think they discredited themselves in the eyes of the iranian people. the iranian regime has repeatedly asked the united states to close the base in iraq. they say this is a condition for better relations between the two of us. so we closed the base and what happens? nothing. the iranians continue to work with iraqi agents inside iran.

the united states, in my view, quite dangerously, just liberated a number of high-value agents in iraq that were running these networks killing american soldiers and planting ied's. we just released to them and allowed them to get out. we essentially told the iranians, you may continue to conduct terror attacks against u.s. troops with impunity. caller: good morning. thank you for c-span. i wish brian a lot of love to get cameras into the series of hearings on health care. i'm concerned about having -- our american service people

fighting, dying, and coming back crippled from its worsthe wars. the media will not even acknowledge we're in pakistan. i would like to know where you get your funding for your democracy in iran group. do you get funding from the cia? are you in constant contact with these people to get this vast amount of information that you dealknow? guest: i do not get funding. we do not have any funding. we began in 1995 as a nonprofit foundation. we began with a grant from the national endowment for democracy, which lasted for two years. it was supposed to be a seed grant.

they are notoriously reluctant to fund any kind of opposition activities because they have been cheated so often. i can understand that. everything then we do is done on a voluntary basis. there is 0 funding. host: this is a headline on c- span.org. -- this is a headline on cnn.com. are you on the list? guest: we are no. 29 on that list. there are some left-wing groups. there is a center for american progress on the list. it is quite astonishing. host: how did this list, about, and when did it start? guest: we have been identified many times in the iranian state run media as a cia front.

apparently, this caller from new york thinks that we are as well. anyone who thinks it operates on something other than the profit motive must be working for the cia. there are other motivations. sometimes people believe in things. host: what is your motivation? guest: i believe in freedom. host: why iran? guest: is a long, personal story. my wife and i met in paris during the revolution. we had friends and family members going back to iran at that time. i fell in love with the people. i fell in love with the region. i spent many years in the general region, not iran itself. it is something that grows on you. we are so privileged in the united states. it is only when you have freedoms taken away, or you go to a place where you see the

freedoms have been taken away that i found as a young american in the 1980's, that i would appreciate the value of my freedoms in this country. i thought it was something worth helping other people to achieve. host: next phone call on the democratic line. good morning. caller: you seem to have such a great knowledge of iran. why don't you talk about the recent nuclear trigger document that former cia agent said was a forgery? it was forced by israel or britain. why don't you talk about the 16 intelligence agencies in america that have flatly stated that they can find no nuclear program going on in iran for a bomb? guest: the agency is not known to be aggressive in investigating clandestine nuclear weapons program

anywhere. it has repeatedly stated in its official report that they cannot resolve a number of issues in iran's declarations. they cannot resolve information discrepancies. they cannot get documents from iran involving whether it is the nuclear weapons trigger or other documents. they have said on the record we cannot rule out a nuclear weapons program in iran. this is not something the iaea likes to do. when the organization says they cannot certify is a civilian program, you know something serious is going on. add to that the other information we are getting. there was an iranian defector who came in in 2004 with a laptop that contained a number of blueprints that have been looked at by intelligence agencies around the world, including many in europe, and

authenticated. they appeared to be a nuclear warhead designs. there have been power point presentation is that have shown that a closed door meeting in february of last year at the iaea show the progress reports on iran's nuclear weapons work. .

as far as this man being concerned about freedom in the countries, there are a lot of people in africa who would like to be free and i don't hear you talk about them. i don't hear a cry of of going into africa to improve conditions. i would like to know specifically what your recipe is for iran. the you have one? are you just kind of building up a case against iran? because israel has nuclear weapons. and they are close to iran. so i can imagine iran feels threatened. also pakistan has nuclear weapons. if we don't want iran to have nuclear weapons. it sort of makes sense. swayback in the 1950 -- way back in the 1950's, i heard the cia helped us overthrow the existing leader in iran. ever since then they have been a

little bit paranoid about us. we are in essentially taking over the middle east, which is what is happening, and it looks like you are one of the people who wants to do that or something. what is your recipe for iran, what do you intend that we should do? guest: the good news about iran but is there is a broad based freedom movement. no one needs to take over iran. the recipe is to help of the iranian people take over their own country, regain control of their own country. many of my iranian friends talk about the occupation of iran by islam. iran is not an islamic country to begin with pared -- to begin with. they believe the downfall of persian culture was really by the influence of islam. that is one of you. an iranian view, not my personal view.

the good news is you have the broad based probe democracy movement. it includes dissident cleric. when i set up the foundation for democracy in iran in 19951 of the founding members was a dissident cleric. i believed to very profoundly that there are fractured lines within the traditional kurds. in iran that can be exploited. traditional clerics actually hit the regime and reject the receipt -- regime. they believe it is un-is lahman. one fractured line. people inside the revolutionary guard who don't like the with the regime is going. they are also willing at a certain point, i believe, to take action should the violence become such -- host: what kind of action? guest: at it obviously remains to be seen. but there has been a lot of talk in iran and the last couple of months, especially the revolutionary guards, closed- door meetings that i have heard

about from people who were personally present, a real crisis of conscience. people saying, this is not why we made the revolution, to turn the guns on the people. we are killing the sons and daughters of the revolution. ahmadinejad is making it happen, how many -- khameni is making it happen. that is really the good news of the country. i believe ultimately that will win out. host: explain how the iranian government works. the difference between the president, supreme leader, etc.? guest: i hate to say it, but there is no constitutional recipe. the way it is supposed to work is not the way it works today. the way it is supposed to work the supreme leader has the power and the president is elected as a figurehead, he appoints the cabinet and cabinet is approved by the parliament and they do the day-to-day affairs of the government and the supreme

leader is kind of up there in law law land and looking down with his supremely -- with his regal view, kind of looking down on the world from on high. it is not the way it happens. today khameni is personally in control of the army and intelligence service, of a good deal of the economic activity inside iran but he is forced to share that with a fraction of the revolutionary guards loyal to ahmadinejad. ahmadinejad as president has amassed much more power than any other president in every history of the islamic republic. so he has kind of broken through a constitutional barriers that would prevent him to have access to law enforcement and intelligence sources. khameni, he needs him, that is why he supported the election putsch but he fears them -- and interesting cleavages that can

be exploited. host: robert on the republican line from missouri. good morning. caller: i am kind of along the same line of the previous caller -- this government really doesn't support democracy in iran because of the last democratic government they had, we overthrew. we overthrew them because of oil. our government was requested by britain, bp was nationalized by iran and they refused to lower -- the iranian government wanted to renegotiate the contract to get a better deal for the iranian people. so, the cia intervened and

created a scene where the government is overthrown and we've installed this shah. the reports are now, the unrest, the latest thing, when he was there he was very oppressive to the people of iran and stall by our government. host: what is your question or comment? guest: what the government of iran wants to do now is level the playing field because we have backed israel for so long, that they have been of boley in that area. host: let us get our guests to respond. guest: i have to actually agree with the caller that the u.s. of ministrations today does not support democracy in iran. i think it is tragic, and error. i would certainly hope president

obama would rethink of that strategy and instead of siding with ahmadinejad and reaching out to ahmadinejad and khameni, that he would support the people. i want to say something t somethinghe shah's rights record. amnesty international, who was never a friend of the shah, and road i don't know how many reports about the oppressive nature, finally concluded there were about 350 extrajudicial killings during the 35-year reign, 350. this was terrible, horrible, justified overthrowing the shah. the islamic republic when it came to power killed 3000 people in the first week, in the first year, about 50,000 people. the human rights record of this current regime in iran is abysmal. it makes the shot -- i hate to say it makes a look like a choir board -- choir boy but he

allowed women to serve in the cabinet, he allowed to serve as judges, head of customs authority and other senior positions. women since then have not been allowed to do things like this. so, i think we have to be accurate in the way that we recall the iranian history and the way that we compare it to the present. what does this regime want to do? they want to impose their version of islam on the world. and don't take my word for it. simply listen to what ahmadinejad says. he said it is perfectly conceivable for there to be a world without the united states and perfectly conceivable for there to be a world without visible. he calls for the destruction of the state of israel, destruction of the united states and he calls for a world islamic state under the rules ship of iran. so, that's not what i want, it is not what i think he wants, it is what he says he wants.

host: next phone call, chris on the democrats' line. caller: good morning. mr. timmerman, there are many points on which i agree with you, particularly with regard to the persians versus the islamists, but as i look at your background material, it looks to be extremely partisan. the kind of publications you write for, the kind of support that you get, kind of really places in doubt your credibility. i don't know. host: how do you respond? guest: with a smile, obviously. i tell you, the type of publications i write for our publications that allow me to investigate the type of stories i think are important. i worked for "the atlanta

constitution," it "usa today." cbs news, abc news, i have written for "the new york times" and "newsweek" and "time magazine." i was fired from "time magazine" in 1994 after investigating a story about the sell off of u.s. military technology -- military factories that were closing down and auctioning off of the equipment to, as china. i had a tipoff, a friend from a government agency, say you have to come to this plant in ohio where they used to make the b-1 bomber, we are selling it to the communist chinese. i convinced the editors of the magazine this was worth doing. we had a four-page kansas ready to go. i went to a number of different plants as well. at the last minute, literally the friday before the publication, pulled me in here in to washington, d.c., into the bureau and said the story is not running and, by the way, you are

fired. i said, ok, why? well, because we just got a letter from the commerce the part of completing they did not like the questions that you ask them and you're reporting was one-sided and biased. i said, that is extraordinary, extraordinarily interesting. i don't know the case in history where a reporter has been fired by a large national news organization because a sitting administration didn't like the reporters questions. host: last phone call for mr. timmerman. los angeles. caller: mr. timmerman, talk about your association with the jewish institute -- and the jews are in charge of the pentagon. guest: yes, i among the advised the board of the jewish institute for national security affairs. it is a think tank based here in washington which promotes a u.s.-israel defense cooperation and security cooperation baird

one of the things they do is they take retired generals and admirals to israel so they can see the country and exactly what the security situation is but a starter recently to take police officers to learn a bit about how is a real deals with terrorism threat on the ground. i think it is a great organization and i am proud to be associated with it with other radicals like jim woolsey and the late jean kirkpatrick and all these other whacko zionist right wing extremists. so, i am honored to be associated with them. host: for people want more on your writings, where did they go? guest: and number of places, my website the most simple. iran.org -- and i write regularly for newsmax.xom. i would like to thank my editor for supporting my travels. sometimes they don't even know where i am. host: do you have to pay for your own travel?

guest: sometimes i do and sometimes i don't. it is always a negotiation. life is always interesting. host: thank you for your time. appreciate it. next, the role of the federal reserve. at the front page of "the new york times." host: we will talk about the federal reserve next with allan meltzer. >> more on health care. the president has scheduled another white house meeting today with congressional leaders in an effort to get a final health care bill as soon as possible. the president is encouraging lawmakers to bypass the usual conference committee negotiations between the two chambers and interest of speed. the house leadership aide says democrats agreed the house will work off of the senate's version, amended, and send it back to the senate for final passage. the aim is to get a final bill to the president's desk before the state of the union address sometime early february.

as the 2010 election year gets under way, two senators and one that governor, all democrats, decided not to run for reelection. senator byron dorgan of north dakota, colorado gov. bill ritter, and senator chris dodd with just enough to hold a news conference today. meanwhile a former democratic house member, harold ford, previous of tennessee, said he will announce it -- announced in the debts month ago whether he will challenge new york democratic senator chris d'angelo brand who replaced now secretary of state tell bricklin -- a report that two suspected u.s. drunk strikes killed -- the first attack killed seven and the second killed five. the identities of those killed are unknown according to officials speaking on condition of anonymity. some of the latest headlines on c-span radio.

>> admiral michael mullen, chairman of the joint chiefs of staff, talks this morning about the role of the u.s. military. his audience, high-school students at the washington center for in turns. live coverage at 10:00 a.m. eastern here on c-span. at noon, in discussion on access to and availability of water in the developing world and how it is key for further development, hosted by the wilson center and a catholic relief services. the photo on your screen of president richard nixon and elvis presley taken in 1970 is the most requested photo in the national archives. two people who were there, assistant counsel to the president, and a veteran music industry professional, a longtime friend of elvis presley, will talk about that photo-secession. we will have that discussion tonight live from the national archives at 7:00 p.m. eastern on c-span. >> "in fed we trust," on fed

chairman ben bernanke and the role he played during the economic collapse. he will discuss it with alice rivlin, first director of the congressional budget office. >> the new c-span video library is a digital archive of c-span's programming, from barack obama to ronald reagan and everyone in between. over 157,000 hours of c-span video now available to you. it is fast and free. try it out at c-spanvideo.org. >> "washington journal" continues. host: joining us from allan meltzer, professor and export -- expert on the federal reserve and he has written three books on the federal reserve. the front-page story in "the new york times" this morning is --

host: before you answer that question, was the federal reserve set up in the first place to recognize baubles and our economy? guest: not at all. it was set up back in 1913 by president woodrow wilson under the gold standard, so there weren't very many possibilities of bubbles and you could not do much about them anyway. it was a very passive institution when it was set up and set up on a program that president wilson did. the big argument was not whether we would have a federal reserve but the question was then and many times later, who was going to control it. whether it would be controlled by what were called the politicians in washington or the

bankers in the country. wilson's compromise was to make semiautonomous regional banks, 12 of them, and the board in washington that would supervise it. host: explain how the federal reserve works. guest: nowadays it is a very different organization from the one that wilson helped get started. what it does is it tries to control the federal funds rate, the rate at which bankers sell reserves supplied by the federal reserve, sell back and forth to each other to cover something called required reserves. banks have to hold reserves with the federal reserve, and if they have too many, the want to sell them, and too few, they want to buy them. there is a market for the reserves and the federal reserve controls the rate in that market. by doing that, it influences many other rates, including the stock exchange and the mortgage rate and so on but not directly.

host: it has also been dubbed, the lender of last resort. where does the phrase come from and how does it work? guest: it is a starkly and old, old phrase, goes back to 19th century bank of england. the idea was when there was a crisis, -- welcome a crisis like the one we just went through when none of the banks wanted to lend to each other, they don't trust each other, they want to hold cash and they are not sure what will happen tomorrow or the day after tomorrow so the best thing to do for them is to hold cash. there was somebody who was supposed to supply that cash, that was the lender of last resort and that job became the job of the central bank. in most countries of the time this started, the central banks were all private institutions. later, many of them became public institutions. host: you talked about how the fed was set up to be independent. what does it mean to be

independent and how is that independence viewed within the federal reserve? guest: the idea began under the gold standard. there were real restrictions on what they could do. but they were independent. the main idea at that time was that the federal reserve would not finance the government. if the government it -- had to borrow, it had to pay the market interest rate and the central bank would not finance a because everyone knew then, as they sometimes forget now, when a finance the government by buying the paper they are really creating the possibility of inflation, or if they fail to do it, possibility of deflationary. independence as it originally meant, is they were constrained under the gold standard not to buy government debt. the idea of independence has changed many times. most of federal reserve governors, that is, most federal reserve chairman, had not been terribly independent.

paul volcker was the most independent chairman the federal reserve has had, and that is the main reason why he was able to end the big inflation of the 1970's. the present federal reserve is not acting independently at all. it cooperates with treasury bailing out various agencies. no previous federal reserve ever did anything like the things this one is doing. host: how is the word independence viewed by the federer reserve? guest: i asked them about that and had about a to our conversation about it. it is pretty vague, i would say, in their mind. they don't like congress looking to closely at what they do, but of course, it is a democratic country and congress under the constitution has a right to coin money and regulate the value thereof. so the fed would reserve is their agent. they often cooperate with the administration but they like to

keep a hands off relationship with the administration so they are not forced to do things they do not think are in the public interest. host: i have at the desk before me book 1 and two of volume two -- guest: advance copies. host: you wrote a previous volume of the federal reserve. these are three very lengthy books on the federal reserve. who did you talk to for these books and what sort of access did you have to documents? guest: the federal reserve was very cooperative. they knew me, of course, for a long time, and they knew i was a critic and they were very happy to have someone as critical as i was not to be seen as an insider writing the history. for a long time they wanted the history to be written and they were very cooperative. they were made available to me under the freedom of information

act, everything i asked for. the federal reserve banks are not under the freedom of information act but i went to them and they cooperated nicely and give me access to everything i asked for, i interviewed many of them for the book. they were very cooperative. host: the first volume dates back to the beginning of the federal reserve and you wrote in one of the books that the federal reserve has not been marked by controversy in its 90- year history. there have not been any significant of leaks or ethical stance -- scandals. why is that? guest: it has a high this breed accord -- espirit de corps. there were michael -- minor scandals, people leaking information, but even that has been relatively small thing. it has just been a very good

organization. it is considered to have the best professional economic step in the country, if not in the world. host: that is part of what "the new york times" writes about today. it talks about, who serves within the federal reserve. it is an echo chamber within the federal reserve. that is why it was difficult for federal reserve chairman ben bernanke when he served under the former federal reserve alan greenspan, for them to see the housing bubble happen. what is your take on that? guest: i don't agree with that. there was a member of the board who has since died who presented them with that information. alan greenspan himself testified -- one of the mysteries of the current crisis or disgrace all aspects of the current crisis, is that congress won't do anything about what was the initiation cause of the crisis.

under various administrations, democrat as well as republican, they have tried to increase housing. after a while they were giving look -- no down payment loans for people without a credit rating. if that isn't an indication for difficult, it is hard to think of what would be. alan greenspan among other people testified about that. my colleague at the american enterprise institute, who had -- who at one time was the chief counsel in the white house and former chief counsel of the treasury, a very knowledgeable person, has spoken over and over again about the dangers that were coming from fannie mae and freddie mac and how buying these bad mortgages -- you know, the government owns half bad mortgages that were produced under subprime loans. we are going to lose hundreds of billions of dollars. what does the treasury do? it just expanded the amount

fannie mae and freddie mac -- that is a scandal. what we need to do is get rid of anime and freddie mac. if they are going to subsidize housing, which they most certainly will, it should be on the budget. that is way democratic government is supposed to run. fannie mae and freddie mac running around the democratic process and open to corruption, and has been corruption. host: of this article notes the hostility that has increased for the federal reserve and the chairman ben bernanke. but before this hostility turned on the federal reserve, when alan greenspan was heading up the federal reserve, there seemed to be admiration or reverence for what mr. greenspan would say. how can this institution be both revered by some people and have distain for mothers? guest: that is easy. when times are good and things are going well, they were great

and people like them. when times are bad, as i have been, people say, look, why is the public angry about the puppet of reserve is doing -- they don't like the bailout. they don't like the fact that they are advancing number, the example, ford general motors acceptance corp., they did not like that we advance money to general motors and chrysler and hundreds of billion dollars to aig. they say, why of giving all this money to the bankers and the people who made the problem and nothing to us? host: professor, there seems to be distrust of the federal reserve. can you explain how the board is set up, who serves on the board and how the regional banks are set up? some of you this institution as a secret society. guest: hardly. it is a lot more transparent than it used to be.

in the history of central banking, up to certainly the 1930's and maybe even 1950, it was none of your business what the central bank did and a more or less said that. the operated and did what they wanted to do and if you didn't like it, that was a problem you had. we are a democratic country so more and more there has been an increase in transparency. the federal reserve announces since 1994, it finally got around to announcing the policy action, releasing the minutes to give a made available to me everything they want. congress is pushing to get more information from them all the time, the chairman of the federal reserve testifies before congress four times a year and talk about what his plans are and how he sees the world and what he thinks the problems are. so, they are just much more transparent than they ever were, more so than many central

banks. it is just not true it is a secret society. host: how does the board were -- work and why are there regional banks? guest: the regional banks are because of a compromise. who was going to run this important institution? president wilson developed a compromise and said there were going to be semiautonomous, whatever that meant that the time, regional banks, eight to 12, and in the and they were 12. in the end they were going to do the action and make the major decisions and a board in washington would supervise them. gradually the power shift is of the board and washington has the control over what is done. but there are 12 regional banks. not originally, but now there is a major entity in the federal reserve called the federal open market committee.

that meets regularly in washington, eight times a year, and they make decisions about what the interest rate is going to be and various other things that the fed is responsible for. that committee is made up of the seven members of the board of governors and five representatives of the central banks, one of whom, new york, is always there and the others rotate through the 12 banks, through the other 11 banks. that is the organization, 12 people. 19 members who come to the open market committee, the 12 bankers, but only five of the bankers get to vote. host: as we go to the first phone call for professor allan meltzer, let us go to the first screen, the definition. georgia, danny on the republican line. caller: thank you for c-span.

good to have open minds and able to talk. what you said about the gold standard, and watching this gentleman on tv, very learned. but i do have one question, especially about paul volcker back in the 1980's. what was it he was doing? i know he put a stop to inflation -- money tight and raising interest rates. we had a two-year recession, 10% or 11% unemployment. some people paid the price and it hurt the manufacturing sector because the dollar got so expensive relative to other currencies. i think that really is what started. between then and now, the amount of money for profit, their earnings every year, 20 cents for every dollar earned in america, to 42 cents. how will you have labor intensive industry and how would you have people working when all

the money is going to the financial sector where you don't have to hire to many people. all this money, bonuses and everything else and nobody can stop it. last thing, the need to bust down and break up the big monopolies, oligopolies to places like goldman sachs and let banking get back down to one -- to earn money in their own businesses for people at home for the family spirit it is not about speculation or hedges or anything else. guest: there are a lot of questions there. let me start with a few of them. first, yes, it is true that paul volcker raised interest rates -- that is the way we ended inflation. it is also true of the one of the rate went as high as 10. %, a little higher than it was at the peak so far this time -- 10.8% but it is also true that

following the end of this inflation we probably had almost 20 years of stable growth and low inflation with very mild recessions. when ronald reagan took office in 1980, the stock market was around 800. when he left office, 1989, it was up around 3000. those were periods of great prosperity and it went on to, until the federal reserve made a big mistake keeping money to easy, and more importantly, the government made the mistake of continuing a bad housing policy. loans to people who can't pay, you will have defaults. that is what we did and that is a housing policy and the blame for that belongs in the congress and in successive administrations, and i republican or democrats -- neither republicans or democrats

stopped it. in terms of what the banks should do, i have testified before the house and senate is what we do need to do is get rid of something called to big to fail, the idea of the federal reserve bails out the large banks and let of small banks fail. my proposal is a simple one, and it says that the bank can choose how big it wants to be but the larger it is, the more proportionally it has to hold reserves. it has to have its stockholders at risk and not the public. the present system is a system in which the large banks get the profits and the public takes the losses as it is now doing. that is not a system that is either good for the country and certainly not good for the taxpayers. we need to get rid of that and we need to have people tell their congressman we want to get rid of too big to fail and too big to fail. host: are democrats line, good

morning. guest: professor, your last point, -- i have two questions, please indulge me. why did the federal reserve led investment-banking go under the federal reserve radar? it should have been regulated by the banks -- philandering and everything else those investments bankers are engaged in. why did the federal reserve let us look around. doesn't the fed reserve have a schizophrenic character the stick? i say that because the fed reserve receives a statutory authority through congress. yet appointed by the executive branch. how something can be eponymous one that is a dichotomy of authority -- wouldn't it be better if you make it a fourth leg of government and make it a

voting position? just as far as an elected official and be held a comet -- accountable? guest: i believe in accountability. but let us first get the facts. the chairman and the members of the board of governors are appointed by the president and confirmed by the senate -- like secretary of treasury, secretary of defense, state. there is no difference there between that and any other major function of government. the members of the banks -- the federal reserve banks, the 12th but will reserve banks -- are appointed by the boards of directors of the banks and approved by the board in washington but not by the congress. that is a contentious issue. it has been a contentious issue for many years and people have different views. i don't see anything wrong with that system, with the way that has worked. as a matter of fact, i think

presidents bring information to the board meetings that is not available in washington. they bring a lot of information that they learn from their local people, the people on the boards and the businessmen and labor unions and general public. that is valuable information that should be useful to them. as to the question about the investment banks -- yes, we have this schizophrenic attitude that what we need is more regulation. but regulation fails. just think what we have been through recently. we had made off, -- bernard madoff, a regulated by the securities and exchange commission, stanford, regulated by the security and exchange commission, the big banks of new york. one of the things people don't hear very much is, the federal reserve had people sitting in every one of those banks during the period in which they were

making the bad loans and they were not doing anything about them. so, the idea that regulation was going to get us out of this problem is wrong. what we need to do is go and put incentives on the bankers. that is what i want to do, make the bankers responsible for loans. make every banker get up in the morning of worry about what is on its balance sheet. how'd we do this? get rid of too big to fail. it don't bail them out. if they fail, they fail what this failure mean? it doesn't mean the bank disappears. it just means we wipeout the stockholders and we get rid of the management and we we adjust the ownership and control of those assets to somebody who hopefully will manage them better. that is what we need to do. until we do that -- and we did that up until 1970. it is only 30 or 35 years we have been bailing out banks more and more all the time. that is a big mistake because it

encourages risk-taking. economists call that moral hazard. but it is just a mistake. you take the losses and they make the profits. not a good idea. host: indiana, mark on the independent line. guest: the solution is to end the federal reserve. our framers knew about paper money and the evils of a central bank. the central bank is in the communist manifesto. john adams wrote to thomas jefferson and 1787 -- constitution of confederation, the want of honor for merchant so much as downright in rents of the nature of corn, credit, and circulation. the revolutionary period is similar to what we have now. we did issue paper money back then.

the continental currencies -- fiat money system. what happened to the continental currency is it crashed and that is what is going to happen now. guest: i agree with you that we are likely going to have inflation again but i don't think we want to go back to the gold standard. i know that is going to irritate a lot of people, friends of the gold standard, including my old friend congressman paul, but the gold standard can only work if other countries join the gold standard, otherwise the united states on the gold standard would buffer every single currency shop in the world. i don't think we want to do that. second, four years when people talk about the gold standard i would say on election platform, we don't have the gold standard, it is not because we don't know about the gold standard but because we do. it meant that you have to be willing to accept a lot of unemployment in order to

maintain. we are not willing to do that. the reason why we don't have the gold standard is because the gold standard required us to accept a level of unemployment the public is not willing to accept. so, they went to something that they hoped would be better. it may not be better, but it is something that date showed no sign of wanting to get rid of. president reagan, under pressure from the gold standard group, had a commission. the commission looked at the gold standard and decided it was not a good idea for the united states and i think that was the right decision. now, we do need it restrictions. we need restrictions on what the federal reserve can do but they should be some that fit with the modern view that it is both unemployment and inflation that we have to worry about. so, we need restrictions that do that. and i believe there are proposals to do that.

many countries have adopted proposals of that kind. we have not chosen to do that. host: illinois, philip on the republican line. caller: the person who called in to speak to you mentioned the gold standard and the competition, article one section 7 -- take anything for tendered for payment of debts. just trying to explain why this is overlooked. i don't see an amendment to the constitution and said it is now and void. guest: the constitution says an article one, section 8, i believe, it says congress shall make laws regulating the value of coinage, and that is the article under which the federal reserve is created. they delegated to the federal

reserve their responsibility, at the time, under the gold standard. but no one on the world wants to go on the goals standardbred as i said, we don't have the gold standard because we know about the gold standard and not willing to accept as a modern society the level of unemployment it would require. host: west virginia -- george on the line for democrats. caller: y. does the federal government have to bail out the auto industry and banks? i think it is wrong. we should not have the bailout anybody. guest: amen. ought to cut you do things wrong and waste money you should not be bailed out -- caller: you do things wrong and this money you should not get billed out. some of the consequences. guest: i agree with you. caller: and why does the president of the united states need all the new czars?

we have people appointed and voted on by the senate and anybody? why do we need all the other czars put in place? and the big -- we don't need them. we have department heads. it shouldn't be. the american people should be in an up rise and demand they be removed. guest: let me just answer that by saying for a very long time, so often "the new york times" the mentoree uses it as a key to the crossword puzzle, i say capitalism without failure is like religion without sin, it doesn't work. i agree wholeheartedly with you and i agree about the czars. this is a democratic country. we as elected congress and an administration subject to the public's review. host: johnston, colorado, dick

on the independent line. caller: yes. i was wondering if they reinstated the glass-steagall act, would this have eliminated the problem of housing? guest: no, the house and had to do with policies to encourage housing, policies designed to give poor people a chance to own their own homes. that is, on paper, a desirable thing. but to do it without downpayment and recognition of the credit losses, that is not a good thing. the glass-steagall repeal, but the time it was repealed it had almost no effect, if any. the reason was the investment banks were doing everything the commercial banks are doing -- and commercial banks for doing everything investment banks were doing. no other country adopted glass-

steagall, and the whole idea of a with protecting the public was faulty. what we need to do is put the risk of the people who take them -- make them bear the risk. if they don't do that, there is no regulation that is going to work. we will talk -- looking for systemic risk. what is a systemic risk? no one can define a system of risk. to the congressmen in your district who says the company here failed, and about 1000 people being unemployed, that is a big risk, and his job is to see that something is done about it. that is just going to be an open invitation to more of the bailout. we don't want to go down that route because that is going to be the enemy of growth and freedom. host: youngstown, ohio, jeff on the republican line. caller: i have a question.

it is a pretty simple way that i see it. the treasury prints the money, the treasury lends the money to the banks and the banks lend the money to us, the people, we pay the banks back their interest and make their money and the banks pay the u.s. treasury back with interest and the treasury makes money, and us the people make money and we would not have no national debt and it eliminates the middle man, the federal reserve. it is almost like common sense in a business. why can't that be done? guest: elwell, -- well, we are the largest economy in the world. you can read all of these things about china been the threat to us but the chinese had a -- of about -- gdp of about one-tenth of hours. they may eventually grow but we are a big country involved in the world.

we have exchange rates, we have to control inflation. it has to be somebody who monitors inflation. moving the regulation for one place to another is not going to make very much difference. what we need to do is put on rules that restrict the independent action that they can take and make the people who take the losses, as i said several times, make them responsible for taking the losses. then we have a sound financial system. host: what is monetary policy? guest: monetary policy is a decision to control interest rates and money growth. host: how does it work? guest: the federal reserve at its meeting, open market committee, decides to set an interest rate and at that interest rate it is willing to lend as much as the market wants. if the market wants to much, it is supposed to raise the interest rate to cut back on the growth of money.

host: what is inflation, deflation, and why should people care about it? guest: inflation is a stealth attacks on the wealth that you own that is fixed in dollars. if you owned the bonds or if you have a mortgage, the value of that mortgage, the real value of that mortgage adjusted for inflation is the amount after you subtract the inflation. if the interest rate is 3% now and the inflation rate is 2% now, then the real interest rate is 1%. that is what is moving around in our system and causing prosperity or the lack of prosperity. what monetary policy does is set that interest rate and takes the consequences. among the consequences are inflation, unemployment, and exchange rates. host: clifton park, in new york.

carl, good morning. caller: oi have concerns that former executives of many of the investment banks, especially goldman sachs, are and have been responsible for monetary policy and for regulation. guest: they have been appointed. all because they have been appointed. i'm wondering if you share that concern. and are there expert economists in the various think tanks and universities who could be appointed also and have more -- guest: elwell, they are. caller: as far as the average person. guest: well, mr. bernanke was a princeton professor. there are many economists -- i think up until 1965 there were

very few economists in the federal reserve system in principal roles. now they are dominated by economists. many of them university economist who have become president of reserve banks or members of the board of governors. the white house has lawrence summers, former secretary of treasury but also former harvard professor and president of harvard university. there are lots of economist there. the problem is not the presence only the people of wall street but, of course, you know, if you appoint a secretary of treasury from wall street, some of them are going to have a friendly relationship with the people they used to work with or the people we used to work with them. that is inevitable. we will not avoid all conflicts no matter how we try. what we need to do, as i keep saying, is we need to put rules

on the that restrict them. and my proposal is a very simple one. they should negotiate a rule -- how much inflation and would there be two years from now, given their policy, how much unemployment. they negotiate that with the secretary of treasury. if they achieve it, that is fine. if they don't, they should offer their resignation and explanation. there are going to be valid explanations -- oil price went up so inflation looked to be higher. farm prices went down because there was a drought. there are a lot of things that can happen over which they have very little control. i proposed that a long time ago, back in 1988 i was in new zealand and i proposed it to the central bank of new zealand. they adopted it and improve upon it and that is how we got the idea of inflation targeting. negotiate with the minister of finance, comparable to secretary of treachery, negotiated an

agreement as to what the inflation rate would be, what the employment rate would be and if they make it, that is fine, and if they don't they have to offer their explanation and resignation. that idea has spread to many other countries, but not here. host: new york on the independent line. caller: good morning, how were you? i have two things. one at a time. when i heard the problem could be $600 trillion worth of this bad paper, my gut feeling tells me the system is probably broken. what you think about that, and then i will give the second question. guest: the fed has over $1 trillion of excess reserves. if a much more than usual? it is about $1 trillion more than usual. so, we have to mop back up or we will have big inflation. they talk all the time about how

they are going to do it but they have not said they think it is going to work, and i don't believe it is going to work. they say we will pay interest on the reserves and we will get the banks to hold them. i just don't believe that. we will work -- sure, the world for more because the receive interest but they will not hold it $1 trillion excess reserves. the half to start mopping up the excess reserves and it will be a hard decision to make because it will raise interest rates and there will be an outcry from congress, the administration, the business community, labor unions and probably from the public that says, we've got a lot of unemployment and you have to do something about that and let inflation wait. that is a problem the federal reserve will have, but even more, a problem we are all going to have. host: your follow-up? caller: the north koreans, iranians and the russians, and i imagine every other country in the world, is counterfeiting our

currency. how big of a problem is it and how much damage has it done to our money? guest: the far bigger problem is what we are doing to our money. we have budget deficits higher than anything that we ever imagined in a peacetime or even a war times stichel which appeared we have a president -- wartime situation. with a president who says he does not like deficits but what he has mainly been doing is increasing it. we will not cut the budget deficit without doing something about health care. do we just increase the amount of money we are going to spend despite what the congress says? we just said we are going to put 31 million more people on to the medicare rolls without increasing the number of doctors. does that work? nope. how does the congress responds present they say we will cut doctors' pay by 21%. it is that going to get us more

doctors and more medical care? of course not. so, they say they are going to cut $500 billion out of medicare. really? with the number of old people growing? don't believe it. host: washington, d.c., and time on the republican line. caller: good morning, thank you for c-span. two quick questions. one was, i needed more of and collaboration on why unemployment would be so high -- more elaboration on white unemployment would be so high on the gold standard. and instead of the bailout, wouldn't it make more sense to give more tax credits to people so they could stay in their homes and meet mortgage requirements? guest: let us talk about unemployment under the gold standard first. if you say that your policy will keep the price of gold fixed at a certain play -- price, like

the old $35, that means that whenever the dollar starts to weaken, you have to pump in money and that will make the economy expand. but when the dollar starts to go down you have to take money and you have to deflate. when you deflate, the first effect falls on employment. so the economy slows down. that is the idea of maintaining -- deflating, is to make the economy slow down so that prices would fall. eventually they will start to rise again, but will take unemployment in the interim. there is no way we can do this and keep it on an absolutely level playing field all the time. the best we have done -- the federal reserve is now 90 some odd years old. the best period it had was from 1985